Japan's injection press sales see rebound

By: Steve Toloken

November 15, 2013

DONGGUAN, CHINA — Japan’s injection molding machinery industry is seeing signs of a rebound because of a weaker yen and stronger demand in both North America and Japan, with production this year possibly topping 15,000 presses, the head of the country’s plastics machinery trade association said.

There are some dark clouds, including a tougher business environment that’s squeezing profit margins, but the industry overall looks poised to see gains in production this year at its factories both in Japan and outside the country, according to Hozumi Yoda, chairman of the Tokyo-based Association of Japan Plastics Machinery.

Japan has one of the world’s largest plastics machinery industries, and typically sells higher-tech – and higher-priced – machines, so a good year could bode reasonably well for worldwide demand.

Yoda projected that production within Japan will hit 12,000 injection molding machines this year, up from 11,500 in 2012, while production in the industry’s factories outside Japan will probably be about 3,600 machines, a sizable increase.

“We see signs of a recovery,” he said, although he added it was a modest uptick. “The auto industry is recovering.”

Yoda, who is also president of Nagoya, Japan-based Nissei Plastic Industrial Co. Ltd, spoke during an interview at the Dongguan International Plastics, Packaging and Rubber Exhibition, or DMP trade fair, held Nov. 13-16 in the southern Chinese city of Dongguan.

Notably, the figures suggest a solid pickup in Japanese press sales in the second half of the year. The first six months of 2013 saw Japan’s industry make 5,300 machines, Yoda said, but projections call for nearly 7,000 in the second half of the year.

The recovery is also helped by gains in some export markets in the first half of the year, particularly to the United States, South Korea, Vietnam and Mexico. On the other hand, China, the largest export market for Japan’s IMM industry, struggled, Yoda said.

In the first half of 2013, Japanese IMM exports to the United States rose almost 60 percent in yen terms, to 9.51 billion yen ($96.1 million), or about 28 percent in dollar terms, compared to the first half of 2012.

The increase to the U.S. was led by strong sales to the automotive and medical industries, and pushed that country to be the second-largest export market for Japan, Yoda said.

Exports to Mexico also jumped, more than doubling in yen terms, to 2.48 billion yen, according to Japanese government statistics in the November issue of The Plastics Times of Japan magazine, provided by Yoda.

Exports also roughly doubled to both South Korea and Vietnam. Overall, the export gains reflect a Japanese yen that has fallen more than 30 percent against the U.S. dollar since late 2011, making Japan’s industry more competitive globally.

Japan exports about 60 percent of its plastics machinery.

For China, exports plummeted from 16.2 billion yen in the first six months of 2012, to 11.5 billion yen this year, however.

Some of that drop could be because Japanese machinery companies are building more factories in China and can therefore meet demand from within the country, but Yoda also said it also reflects caution among Chinese factories and slow sales there.

Exports to Thailand fell way back, less than half of what they were in 2012, dropping that country from the top export destination in 2012 to number three in the first six months of this year.

Yoda said that reflected the end of the rebuilding boom that happened after Thailand’s industry was forced to replace thousands of machines lost in devastating floods in 2011.

Japan’s injection press industry has been rapidly expanding in other countries in recent years in a bid to lower its costs and better compete in emerging markets. Companies have added production in China and Thailand, and last year, in India, when Toshiba Machine Co. Ltd. bought Indian press maker L&T Plastics Machinery Ltd.

Nissei, for example, opened a factory in Thailand this year and is starting to build a second factory in China that will triple its production capacity there when it opens next year, Yoda said.

Still, even with the sales boom, he said Japan’s plastics equipment industry is seeing profit margins suffer. JPMA statistics show that profits for Japan’s plastic machinery makers were down 30 to 50 percent in the six months from April to September this year, he said.

There is more demand within Japan for machinery, helped by more infrastructure spending, but it’s not necessarily translating to higher profits for the industry, he said: “While stock prices may be higher, banks and stock companies make money, but not manufacturers.”

Yoda said he felt that Japanese companies were maintaining their dominant market share in the important all-electric machine market in China, because Japanese machines are only a little more expensive than their Chinese competitors but offer much better performance.

“The Japanese balance of price and performance is very good,” he said.